Exam 33: Liability of Accountants and Other Professionals

In all cases involving allegations of negligence, the plaintiff must prove that the professional's breach of the duty of care actually caused some injury.

Geoff is an attorney, whose clients include Hydroponic Superstores, Inc. Unless Hydroponic has violated securities law, the contents of Geoff's file on Hydroponic may be disclosed to someone other than the firm​

Professionals are required to adhere to certain standards of performance within their profession.

Fact Pattern 33-1 ​Nelson, an accountant, enters into a contract to provide services to Operational Processes, Inc. (OPI). Nelson does not finish the work within the contract's deadline. This causes OPI to fail to meet certain other deadlines owed to Prime Bank, which results in the firm's payment of penalties to the bank. -Refer to Fact Pattern 33-1.OPI may be entitled to​

Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?​

Under rules of professional conduct, a lawyer should not engage in conduct involving "dishonesty."​

Accountants and other professionals do not face liability under the common law for any breach of contract.

A failure to follow generally accepted accounting principles and generally accepted auditing standards is proof of a lack of due diligence.

For a plaintiff to recover damages from an accountant under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, ordinary negligence is notenough.

In an opinion, an auditor can include a general statement disclaiming any liability for false or misleading financial statements.

Kiana can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of

Digital Systems Corporation files a suit against Ethan, its former accountant, alleging constructive fraud. Digital Systems need not prove​​